Cove’s Cakes is a local bakery. Price and cost information follows:

Required:

1. Calculate Cove’s new break-even point under each of the following independent scenarios:

a. Sales price increases by $1.60 per cake.

b. Fixed costs increase by $465 per month.

c. Variable costs decrease by $0.30 per cake.

d. Sales price decreases by $0.70 per cake.

2. Assume that Cove sold 310 cakes last month. Calculate the company’s degree of operating leverage.

3. Using the degree of operating leverage, calculate the change in profit caused by a 9 percent increase in sales revenue.

Economics - Direct Price Discrimination, Indirect Price Discrimination

A manufacturer of microwaves has discovered that male shoppers have little value for microwaves and attribute almost no extra value to an auto-defrost feature. Female shoppers generally value microwaves more than men and attribute greater value to the auto-defrost feature. There is little additional cost to incorporating an auto defrost feature. Since men and women cannot be charged different prices for the same product, the manufacturer is considering introducing two different models. The manufacturer has determined that men value a simple microwave at $75 and one with auto-defrost at $90 while women value a simple microwave at $90 and one with auto defrost at $135.

A. If there is an equal number of men and women, what pricing strategy will yield the greatest revenue?

B. What if most of microwaves' shoppers are women?

XYZ stock price and dividend history are as follows:

An investor buys five shares of XYZ at the beginning of 2015, buys another two shares at the beginning of 2016, sells one share at the beginning of 2017, and sells all six remaining shares at the beginning of 2018. What is the dollar-weighted rate of return? (Hint: If your calculator cannot calculate internal rate of return, you will have to use a spreadsheet or trial and error.) (Negative value should be indicated by a minus sign. Round your answer to 4 decimal places.)

. A single-price monopolist has the schedules given in the table below.

a. Determine the profit-maximizing level of output, price as well as the amount of profit or loss at this level. Clarify how you obtain the answer.

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

b. Compare between the perfect competition and monopoly market structure.

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

…………………………………………………………………………………………………..

Based on the information below please:

Calculate TR for each price level

At every price level compare TR thus you will calculate the change in TR as the price drops.

In which price range is your demand elastic

In which price range is your demand unit elastic

In which price range is your demand inelastic

Explain how you can assess that in a particular price range the demand is elastic, unit elastic or inelastic.

Price Quantity TR

10 1

9 2

8 3

7    4

6 5

5    6

4 7

3    8

2 9

Question 4: Why some governments resort to price ceiling and price floor for some goods and services? Describe three most important disadvantages of price ceiling and price floor? In what conditions do you think that price ceiling and price floor may contribute to welfare of people?

Question 4: Why some governments resort to price ceiling and price floor for some goods and services? Describe three most important disadvantages of price ceiling and price floor? In what conditions do you think that price ceiling and price floor may contribute to welfare of people?

Q. Why some governments resort to price ceiling and price floor for some goods and services? Describe three most important disadvantages of price ceiling and price floor? In what conditions do think that price ceiling and price floor may contribute to the welfare of people?

Τhe P/E (price to earnings) ratio show us the expected price of a stock based on its earnings. Investors tend to invest in a company with a high P/E ratio and buy its shares. On the other hand, reported earnings are often reconstructed by the companies by using some accounting techniques in order to attract investors. Which are those accounting techniques which can artificially help companies change the P/E ratio trend line?